Getting Serious About Corporate Citizenship -- The Essential, Yet Missing Building Blocks for Responsible Corporate Behaviour
19 Pages Posted: 4 Nov 2013
Date Written: November 4, 2013
This paper argues that the notion of "corporate citizenship" as it currently understood, assessed and practiced is woefully inadequate, since it is almost completely silent on the three most essential building blocks of good citizenship: respecting laws and regulations, paying your dues to the community and engaging openly and in good faith in collective decision-making. None of these three building blocks are sufficiently visible in contemporary conceptions of corporate citizenship.
And they are only reflected in related practice guidelines and reporting frameworks in very scattered and incomplete bits and pieces. The result is that it is close to impossible to have an informed discussion, what type of company performance should really count as good corporate citizenship, who is excelling and lagging behind.
Companies highlight their donations to the local philharmonic orchestra, but do not disclose their tax payments to a specific community. They tout their green credentials, but make it impossible to assess whether their lobbying activities that shape fundamental environmental policies are aligned with their sustainability values. They proclaim zero tolerance for corruption and law-breaking, but say still too little about how their compliance systems perform and are kept effective.
However, pressure for better performance and reporting on all these three essential duties of citizenship is building, albeit from different directions. The proposed "mind-the-basics" approach to re-frame and re-substantiate corporate citizenship offers a galvanizing frame to integrate these reform efforts. The proposed concept is elastic and easy to legitimate, since it only seeks to enable transparency and an informed discussion on these three duties of citizenship, but does not aim to pre-judge what constitutes unfair tax-payments, hypocritical political engagement or insufficient compliance safeguards. It offers progressive business leaders opportunities to take their communication and standing with the public to a new level of substance, responsibility and trust.
The article is structured as follows. The subsequent section (2) traces the rising popularity of corporate citizenship and explains why it is rather contentious and frequently interpreted in a rather one-sided manner.
Section 3 introduces three essential pillars of citizenship duties as they have evolved in the normative political science literature over centuries: respect the law, pay your dues, engage honestly in the public policy discourse. It shows that corporations are deeply engaged in all these three practices and maps their paramount importance, impact and large footprints – not only in the aggregate but also as individual entities – in all three areas. Given this deep and impactful involvement corporations that seek to act as good corporate citizenship face specific responsibilities to be clear about their conduct in these three areas.
Section 4 takes a look at the main reporting standards and current corporate reporting practices on these three essential civic duties. It reviews a number of reporting frameworks, assessment summaries and surveys to arrive at a rather negative picture. Reporting is very limited, uneven and fragmented in all three areas and the main reporting frameworks in use are equally incomplete and do not provide sufficient guidance for disclosing information on this substantive notion of corporate citizenship. As a result, it is all but impossible to infer from current practices in sustainability reporting how good of a corporate citizen a specific company actually is, nor can we even have an informed debate on and arrive at societal calibrations for what would constitute adequate standards for corporate citizenship in these three essential areas.
Section 5 emphasizes that this current skewed approach to corporate citizenship might not be tenable for very much longer. It identifies external pressures for reform and briefly presents related policy proposals that clearly show that change is underway, a fact that is also increasingly acknowledged inside the corporate community. However reform pressures in all three areas are currently not linked up and anchored in a galvanising framework, something that the reworked notion of corporate citizenship proposed here could provide.
The latter is further elaborated in the concluding section 6 which lists a number of benefits that a notion of corporate civic duties based on paying dues, respecting laws and upfront engagement in the policy discourse could provide for different stakeholders, from advocates to corporate leaders, as well as for scholars. Moving towards practical next steps this section also examines to what extent the major existing corporate reporting frameworks accommodate such a notion of corporate citizenship. The analysis finds some scattered, good practice building blocks, but overall a lot of gaps and loopholes, particularly in the area of giving guidance and providing sound templates for clear and comprehensive reporting on political engagement. The section concludes by emphasizing the many benefits that could accrue to corporate leaders that take a proactive role and embrace this substantive notion of corporate citizenship. Taking a step back, this also means that the concept holds sufficient promise for a critical mass of very different stakeholders and applications, which turns it into something that does not only come across as a desirable, yet far-fetched normative ambition, but as a plausible and very practical next step in business-society relationships.
Keywords: corporate citizenship, corporate social responsibility, corporate disclosure, lobbying, business integrity, anti-corruption, compliance
JEL Classification: G30, G38, H26, H25, M14
Suggested Citation: Suggested Citation